Social Responsibility in Fashion Industry

R. Bheda
Garment Manufacturing Technology Department,
National Institute of Fashion Technology
Hauz Khas, New Delhi, INDIA
Email: rajeshbheda@sewingsolutions.org

ABSTRACT

Business Ethics and Corporate Social Responsibility (CSR) are gaining significant importance as
an issue to be addressed by leaders of the contemporary world. The growing concern among the
stakeholders, mainly the consumers, about the business practices followed by the large
corporations has brought in major initiatives in terms of establishing 'Codes of Conduct' for the
business partners of these organizations. Fashion industry has long been accused of not following
core standards in apparel factories in various parts of the world. However, today it is the fashion
industry that has drawn a comprehensive program for responsible manufacturing. The issues
related to Social Responsibility in the global fashion industry are quite complex, as they touch up
on areas like socio-cultural, socio-economic and, in many cases, craft heritage of the people
associated with the fashion industry. There is a need for a greater understanding of these issues to
be able to arrive at balanced solutions. This also needs to be incorporated in the professional
education programs related to fashion industry.

Keywords: Apparel, CSR, Compliance, Fashion, Industry, Manufacturing

1. Introduction

Corporate Social Responsibility and Business Ethics are growing in their importance as themes
for discussions, debates and conferences. It is more so due to the bitter examples like Enron. In
last one year the World Bank Institute has organised three E Conferences on the subjects related
to business ethics, standards and Corporate Social Responsibility. Invariably the fashion
industry figures in these discussions, mostly for the wrong reasons. There is a popular perception
among the Western World that the fashion industry still produces its merchandise in extremely
poor working conditions in the factories situated in Developing World. Leading international
fashion and apparel retailer have developed Codes of Conduct for their business partners in order
to assure their consumer that the fashion products consumed by them are sourced ethically. The
issues related to ethical sourcing or vendor codes of Conduct are quite complex and are likely to
severely affect the way business will be conducted in fashion industry. This paper attempts to
highlight some of these issues and the importance of integrating the understudying of this subject
in the contemporary fashion education.

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2. Corporate Social Responsibility

Corporate Social Responsibility can broadly be defined as responsibility of the corporate towards
the society at large. It concerns with organisation's impact environmentally, socially and
economically. Megan Barry (2002) [1] provides useful definition and further elaboration on CSR,
" Corporate social responsibility is the overall relationship of the corporation with all of its
stakeholders. These include customer, employees, communities, owners/investors, government,
suppliers and competitors. Elements of social responsibility include investment in community
outreach, employee relations, creations and maintenance of employment, environmental
responsibility, human rights and financial performance. Specifically, CSR is about producing
and/or delivering socially and environmentally responsible products and/or services in an
environmentally and socially responsible manner. It is about a company's commitment to being a
fair and equitable employer. “

The word Corporate in the CSR may at times be misleading, as people may get an impression
that CSR is only meant for the corporate world, and the non-corporate or non-business entities
need not bother about it. This is the precise reason why this paper is titled social responsibility in
fashion industry and not CSR in fashion industry, as social responsibility is every body's business.
The global fashion industry consist of various players staring from large multinational
corporations to large manufacturers employing thousand of workers to small sub contractors and
ending with home-based enterprises employing a couple of workers. As these players are likely
to be situated in various parts of the world and exist in different socio- cultural and economic
realities, it is quite a challenging task to arrive at a universal concept of Social Responsibility and
ensure that the operations of the organisation are carried out in accordance with this concept.
Not withstanding this challenge, many leading international apparel retailers have developed
'Codes of Conduct' for their business partners across the supply chain so as to ensure adherence
to basic common norms of working conditions for the workers involved in manufacturing their
products.

3. Consumer Activism and Codes of Conduct

The growing consumer interest in working condition of the factories, where the products are
manufactured, is mainly the driving force behind the introduction of Codes of Conduct by the
apparel retailers. Marsha Dickson (2001) [2] provides good background on this issue. She says,
"Since the mid-1990s, government officials, consumer activists, labour representatives, industry
leaders, and the media have focused increasing attention on working conditions surrounding the
production of apparel. An argument made by some of these groups is that much apparel is
produced in sweatshops and that consumers, among others, must take action against this practice.
Although there is disagreement about what constitutes appropriate working conditions in foreign
countries, the U.S. government and some apparel industry leaders are developing standards and
implementing codes of conduct. By implementing these codes of conduct, some apparel
manufacturers and retailers and various activist organisations are promoting the concept that
outside agencies monitor the conditions in apparel factories. The results of the monitoring could
then be provided to consumers through a No Sweat label or hang tag that would be applied to
garments produced under certain working conditions. Shop. A number of politicians, as well as
consumer and labour activist groups, believe that U.S. consumers would use this type of

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 information in their decisions to purchase apparel. If consumers refuse to buy garments without
the label, they would pressure apparel manufacturers and retailers to have their factories
monitored and to improve the working conditions if needed."

There is no doubt about the fact that the global consumer is becoming more aware of the social
responsibility. The World Bank Institute Survey on Corporate Social Responsibility provided
useful insight on the role of CSR in the contemporary business world. As on 28th September
2002, over 2900 respondents had participated in the survey. A few of the questions and responses
are as below:

• When asked, 'In the last two years have you talked many times about corporate behaviour?',
80.8% respondents replied in affirmative and rest in negative.

• When asked, 'What is the role of large companies in society?' 25.1% respondents voted for
'make profit, pay taxes, create jobs and obey law ' where as 16.1% went for 'set higher ethical
standards and help build better society ' and a significant majority of respondents (58.8%) voted
for 'operate somewhere between the two positions.

• When asked, 'did you reward or "punish" companies in the past year, for example by not
buying their products, based on their perceived social performance?', 52.3% respondents replied
'yes', 22.8% considered doing so and 24.9 % replied 'no'.

• When asked, 'in the first decade of the Millennium, should the private sector, government and
Civil Society Organisations in your country focus more on social and environment goals or
economic goals, 59.5% voted for former and 40.5% voted for latter.

• When asked, 'do you pay attention to the social behaviour of companies in your country?',
87.6% said yes and rest 12.4% said no.

• When asked, 'what is your preferred approach to strengthening international safeguards,

including codes of business conduct?', the responses were as follows :
International law 23.0%, Voluntary implementation 13.3%,
Public exposure 25.4% and Economic incentives/penalties 38.4%.

The findings of the survey are quite revealing. It clearly established that the respondents are more
aware and conscious of the CSR related issues. They constantly observe the social behaviour of
the organisation and believe in individual and collective incentive for promoting Social
Responsibility among the business organisations. While talking about the power of today's
consumer, one of the participants of the World Bank Institute organised e- conference "Business
Ethics and Corporate Accountability: The Search for Standards" wrote, "We should all
understand that the "c" in CSR also stands for "Consumer" social responsibility. We as
consumers and investors should be aware that our decisions and actions have an impact in the
lives of millions of people, and even on future generations. But only consumers that are aware of
the production and other conditions that surround the supply of the products they buy will be able
to make informed and conscientious decision.

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4. Social Labelling Campaigns

Social labelling was thought to be the answer to the consumers need to make an informed choice
while making a purchasing decision. Dickson provides useful background on the consumer
interest in social responsibility in apparel industry. "Social labelling informs consumers about
social conditions surrounding the production of goods. The objectives of social labels are to
provide information to consumers so that they can knowledgeably support ethical businesses and
refrain from unknowingly supporting unethical businesses. As such, social labels distinguish
products from those not bearing a label.

Theoretically, the information from a social label provides consumers with awareness and
concern about an issue. Titus and Bradford (1996) [3] suggest that these sophisticated consumers,
who possess and use the necessary skills and knowledge to consciously participate in market
regulation, will then exercise their sovereignty in the marketplace, supporting ethical businesses
and punishing unethical ones. In this way social labels generate what Friedman (1996) [4]
defines as consumer boycotts where consumers are encouraged to purchase products made by
businesses behaving positively. As a result of consumer sovereignty, more businesses would
behave ethically because it would be unprofitable or damaging to the corporate image to do
otherwise."

5. What do 'Codes Of Conduct' Mainly Cover?

Most of the apparel retailers have tried to be away from a common social label. Instead they have
established their Codes of Conduct. Certain apparel retailers have subscribed to common codes
like that have been brought by World- wide Responsible Apparel Production Program (WRAP),
Fair Labour Association or SA 8000.

The Codes of Conduct developed by leading apparel retail corporations cover certain minimum
norms for working conditions, these are also often referred as core standards. The broad coverage
of these codes are as below (Bheda and Gandhi 2000) [5]
(1) Prohibitions on child labour;
(2) Prohibitions on forced labor;
(3) Prohibitions on discrimination based on race, religion, or ethnic origin;
(4) Requirements to ensure the health and safety of the work-place;
(5) Provisions on wages, usually based on local laws regarding minimum wage or prevailing
wage levels in the local industry;
(6) Provisions regarding limits on working hours, including forced overtime, in accordance with
local laws;
and (7) support for freedom of association and the right to organize and bargain collectively.

Tables 1(a) and 1(b) outline the codes of conduct for 3 leading apparel retailers who source their
merchandise from all over the world.

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6. Broader Issues Related to Social Responsibility and Codes of Conduct.

Will the Codes of Conduct be used as Trade Barriers? The answer to this question is not
straightforward. Even though the good intentions behind the compliance efforts can not be
denied, it is also important to note that if not used judiciously it can prove counter productive. It
is a well known fact that the domestic manufacturers in the Western World are the biggest direct
or moral supporters of the issues related to working conditions in the third world countries.
Observers believe that in the Post-MFA era the social standards will be increasingly used to
block the imports of apparel from the developing countries.

Home Based Enterprises/ Workers: Home based enterprises (HBEs)/ workers play a unique
value addition role to the fashion apparel in many parts of the world, especially Asia. HBEs
provide a significant advantage to the workers involved in terms of: security of working from
their homes, ability of looking after the kids and the elder members of the family. It saves the
time taken for commuting to factories and also in many cases meets the social norms of the
community. Many leading international apparel buyers are objecting to the HBE and want these
activities moved to organised factories, as they feel that the enforcement of Codes of Conduct in
home based environment nay not be easy. Such a move could turn the lives, predominantly of
women workers, upside down. They could suddenly be confronted with issues such as who looks
after the house in their absence, the absence of flexibility of work hours, inability to look after
elders while attending to home-based work and many more (Bheda 2001)[6].

Products Emanating from Crafts an Ethnic and Cultural Heritage: Fashion industry is
always on look out for inspirations. The cultural diversity and crafts unique to communities or
geographical locations provide excellent value additions to the fashion products. It is seen that
often traditional hand embroideries are used on fashion products, but the consumer is seldom
made aware of the unique craft based product that she may be purchasing. This deprives the
customer the pride of possessing a rare hand crafted product and satisfaction of promoting the
craft through her purchase. It shall be a great idea to promote these crafts by co-branding, i.e. the
product could carry special tags/ labels explaining the unique craft. Another important aspect
related to this issue is, whether the craft or the craftsmen will substantially benefit from such
market intervention. In recent years, short kurtas with Chicken embroidery were exported in huge
quantities, the question remains Did the Chicken workers in Lucknow benefit from this? Or was
the embroidery done by hand embroiders in Delhi? These are the areas where the fashion
industry will have to look beyond the codes of conduct and think about the Social Responsibility.

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Table 1(a) - -- Code of conduct for suppliers and subcontractors

Forced or prison Hours of work and overtime

Human rights Child labour Conditions of work
labour
Non-derogation of Prohibited. Prohibited. The minimum Wal-Mart standards are: -- In accordance with national
basic human Obligatory reference to: -- adequate medical services; legislation.
rights. -- national legislation; and -- emergency exits; -- In accordance with local
-- Wal-Mart definition: -- safety equipment; industry standards if higher.
children are defined as persons: -- well-lit workstations; -- Maximum of 60 hours a week
Walmart -- under the age of 15; -- clean rest-rooms; plus one day of leave: annual
-- under the compulsory -- adequate living quarters where necessary; leave.
schooling age of the country. -- prohibition of any mental or physical
Wal-Mart supports disciplinary practices.
apprenticeship education
programmes for young persons.
Non-derogation of Prohibited. Prohibited. The company expects the factories to have In accordance with national
basic human --adequate medical services; legislation.
rights. -- emergency exits;
-- safety equipment;
J.C. Penney -- well-lit workstations;
-- clean rest-rooms;
-- adequate living quarters where necessary;
-- prohibition of any mental or physical
disciplinary practices
Non-derogation of Prohibited. Prohibited. Woolworth outlines the requirements for working In accordance with national
basic human conditions- legislation.
rights. --adequate medical services;
-- emergency exits;
-- safety equipment;
Woolworth -- well-lit workstations;
-- clean rest-rooms;
-- adequate living quarters where necessary;
-- prohibition of any mental or physical
disciplinary practices

Source: ‘To develop basic minimum norms on working conditions for garment fabricators’- Diploma Project by Chander Shekhar and Vivek Rattan Garment
Manufacturing Technology Department (1997-99), National Institute of Fashion Technology, INDIA.

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Table 1(b) --- Legal Requirements and Implementation Guidelines of Codes of Conduct

Sanctions in the event of

Legal requirements Application violation
For all activities compliance with national legislation is the minimum Termination of any business
standard. Wal-Mart or a third party appointed by Wal-Mart will relationship between Wal-Mart
-- Preference given to trade partners respecting prevailing local industry take concrete measures to implement and monitor its and a trade partner which fails to
standards. standards. The plants of business partners are respect the code.
-- United States legislation is applicable concerning: inspected four times a year.
-- import requirements into the United States; Wal-Mart has established a certificate of compliance
Walmart -- the protection of intellectual property rights; with its ethical standards which
-- indication of the country of origin; suppliers/subcontractors must obtain to do business
-- transport of the merchandise; with Wal-Mart (the Wal-Mart vendor partner
information on the merchandise transported. inspection and certification form).

JCP will seek suppliers who conform to the legislation applicable within JC Penney conducts inspections and gives vendors
the framework of their activities. written ratings based on a point system. Cancellation of orders.
-- Prohibition for suppliers to use
subcontractors which do not
respect the code.
J. C. Penney Termination by JCP of any
business relationship with the
suppliers/subcontractors who do
not respect the code

Merchandise must be in conformity with United States legislation Termination of any business
applicable to imported articles. Distribution of the code to all business partners, relationship with the
Requirement included in Woolworth's standard purchase order. including United States suppliers selling imported suppliers/subcontractors who do
-- Business partners must respect the national legislation applicable products to Woolworth. not respect the code
Woolworth within the framework of their manufacturing and marketing activities. -- Woolworth's buyers and other representatives
regularly visit the enterprises of
suppliers/subcontractors. Woolworth has established a
training programme for officials visiting
Source: ‘To develop basic minimum norms on working conditions for garment fabricators’- Diploma Project by Chander Shekhar and Vivek Rattan Garment
Manufacturing Technology Department (1997-99), National Institute of Fashion Technology, INDIA.

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 Capacity Building and Market Linkage of Craft Clusters/ Groups
Traditional crafts continue to play an important role in the world of fashion. At the same time
there are many unexplored crafts across the world that offer unique value addition opportunities.
The two main challenges one would face while linking these craft groups to the fashion industry
are namely, capacity building and market linkage. The capacity building could be in following
areas (Bheda, 2001) [7]:
• Awareness on the quality, consistency and delivery time expectations of the international
market.
• Broad understanding of supply chain
• Working condition expectations of the international market
• Product development for the contemporary market
• Use of supporting technologies
• Business skills

After or along with the capacity building it is important to address the issue of market linkage.
Generally it is observed that there are too many middlemen involved between the crafts groups
and the main buyer. If these middlemen can be eliminated as a result of the capacity building, the
net value realisation by the craft group can substantially go up. This will subsequently help better
earnings for the craftsperson, conservation of craft and improvement in the overall quality of
their life. A few leading international apparel and home furnishing retailers have started
supporting such initiatives.

Falling Product Prices and Cost of Compliance: The apparel producers have come to terms
with the fact that the prices of apparel products have continuously fallen in last 5-7 years and
shall continue to do so in years to come. In such environment, the profitability of apparel
manufacturers globally is substantially reducing. In such scenario, the additional cost or
investment to meet the codes of conduct may be difficult to justify. There are also cases where a
particular manufacturer may invest heavily to meet a specific compliance need of a buyer, but the
buyer may not place any orders in return.

Highlighting this point further Sethuraman (2002) [8] says, " While acknowledging that the goal
of sustainable development must be to create a humane social order, qualitative growth, more
plentiful work places and security and fairness, we can not ignore the fact that industrial society
has certain short comings. The concept of corporate social responsibility must be approached
therefore, with an appreciation of what can reasonably be asked of the business community,
keeping in mind the need to maintain its competitive position in globalised trading environment.
Buyers should accept their reciprocal responsibility of agreeing to pay a reasonable premium for
products made under socially and environmentally responsible conditions."

7. Implications for Fashion Education

The fashion institutes will have to take note of the growing importance of the Social
Responsibility in the international trade. Almost all the leading apparel retailers have established
separate divisions/ departments that look after the compliance to Codes of Conduct. Similarly
virtually all the apparel factories supplying to the leading apparel buyers have positions for

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 Compliance Manager and support roles. These are great opportunities for fashion schools to train
graduates for these growing avenues. It is also important to note that professionals associated
with apparel industry regardless of their specialization, must possess basic understanding of this
subject, as it will directly or indirectly affect his/ her working in the industry. A broader
understanding of the social responsibility among the future professionals will also help the
industry to act in a Socially responsible manner.

References

1. Megan, Barry. (2002), Business Ethics and Corporate Accountability: The Search for
Standards, World Bank Institute and Ethics Officers Association organised E-Conference
September 9 - 27
2. Dickson, Marsha. (2001). Utility of No Sweat Labels for Apparel Consumers: Profiling Label
Users and Predicting Their Purchases. Journal of Consumer Affairs, Summer 2001 v35 i1 p96
3. Titus, Philip A. and Jeffrey L. Bradford. (1996). Reflections on Consumer Sophistication and
Its Impact on Ethical Business Practice. The Journal of Consumer Affairs, 30, 1:170-194.
4. Friedman, Monroe. (1996). A Positive Approach to Organized Consumer Action: The
'Buycott' as an Alternative to the Boycott. Journal of Consumer Policy, 19:439-451.
5. Bheda, Rajesh. And Archana, Gandhi. (2000), Vendor Compliance in Apparel Industry,
Evolving Trends in Fashion, NIFT, New Delhi, INDIA
6. Bheda Rajesh. (2001). Beware! Labour standards are already here. 12th January, New Delhi,
Economic Times
7. Bheda, Rajesh. (2000), Home-based Enterprises in Fashion Industry: A Way Forward,
www.sewingsolutions.org
8. Sethuram, Parmeswarm (2002), Ground Realities, Corporate Responsibility: A View from
India, EU-India CSR Network, Brussels

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